Side by Side for Sale Minneapolis Minnesota
Buyer’s Agent: Remax Results
Seller’s Agent: Jason Reed
We wanted to celebrate another duplex that we listed and sold in Minneapolis. This time it was off of Cedar Avenue and it was actually a side-by-side. We were the listing agents and another Remax Results agent was on the buyer’s side.
We can’t talk enough about what a great opportunity a duplex or triplex could be for people, transforming what would traditionally be an expense into an income producing investment.
While it’s true that at the end of your life your home is usually one of the greatest assets that you have besides your 401(k), the home that you live in is usually less of an asset and more of a liability because you have to pay taxes and utilities. In addition, there are home improvements that you need to do over time.
While all of those ongoing costs still exist with the triplex or duplex, you have the unique opportunity to have an income producing machine inside of your home.
For people that read our blog on a regular basis, or if you’re looking through all the listings that we’ve sold in 2017, you’re probably seeing lots of the same conversations on our blog. That’s because we want to make sure that folks understand that a duplex or triplex is so much different than a single-family home.
We think that everybody gets excited about the sector or business that they are involved in, but we truly think that we are involved in one of the most special segments in all of business.
Too few people go through their lives without understanding the benefits of having an income-producing asset rather than just your typical appreciating investment. While the stock market can provide amazing returns and spectacular compounding interest, there are few ways to find investments that are truly consumer defensive and have a lower relation to the general stock market.
We don’t recommend that people neglect their investments into the stock market through tax-advantaged accounts, we think that good diversification involves three different types of investments – business, stock market, and real estate.
The government has set up tax law to spur people along in beneficial activities such as business, housing, agriculture, and capital investment. That’s why you see such huge write off’s in the 401(k) and IRA world. But while Wall Street has done a great job teaching America the benefits of using its products, entrepreneurship and real estate investing requires a higher level of self-education.
Triplexes and duplexes can be the first step in building a great real estate portfolio. They are easier to manage than most investment properties, having multiple units hedges risk in some unique ways, and they have the unique ability to be purchased with first-time homeowner financing.
Many people will start off by doing an owner-occupied duplex and living in it for a couple of years while they save up enough cash to purchase a second duplex or perhaps a fourplex. When you purchase a duplex or triplex with FHA financing, the main requirement is that you live in the home for at least one year. After you’ve lived in the unit for a year, you would be able to move out and find a tenant to take your place.
Generally speaking, 70% of the rental income will be put against the expenses of the duplex when you go to borrow again. In other words, depending on the rental rates and your mortgage payment, you might be able to simply buy a new property as another first time homebuyer depending on your timing.
Many people that don’t have the limitations of having children or grandchildren will participate in what is called house hacking. The idea is that you make sacrifices in order to position yourself for financial gain in the future. One way that people house hack with a duplex or triplex is by purchasing it with FHA financing, renting out the second or third units, and then finding a roommate to live in the one unit. Those that really want to sacrifice to build financial momentum might even sleep on the couch or even spend time at their parents’ house in order to get higher rents from the roommate.
If you sacrifice early on and build up more cash or equity, you will be able to borrow more to purchase your second, third, or any number of properties in the future.
Another thing that some people do is purchase a duplex with 203K or home renovation loans so that they can fix up the property before they step into it. With these types of loans, you are able to borrow and then fix up the house using traditional financing. They are a little bit complex, and most lenders have no interest in doing them because they are a lot of work, but people can buy the duplexes that need love and get them to a higher standard which creates greater equity.
Regardless of the different reasons why people might purchase a duplex in Minneapolis or the Twin Cities, we are absolutely captivated by the benefits they provide for people.
If you are looking to purchase a duplex or sell your triplex or duplex, we would love an opportunity to earn your business. Please reach out to us on our website or take a look at the listings above, and we can help you understand which property would fit your goals.
Also published on Medium.